[co-authors: Haley Jeppson, Angela Zheng]
Evaluating current formulary access for the 25 drugs selected for Drug Price Negotiation in Medicare Part D shows several selected drugs have higher co-pays in 2025 relative to 2024
Introduction
The Inflation Reduction Act (IRA) is anticipated to result in changes to Medicare beneficiaries' ability to affordably access their medications in the Medicare drug benefit. This can include changes in cost sharing, such as increased co-pays and coinsurance, or requiring additional steps for providers and beneficiaries to receive prescribed medications, such as prior authorization requirements. Our evaluation of 2025 Medicare Part D formularies for the 25 drugs selected for Drug Price Negotiation in Medicare Part D shows several selected drugs have higher co-pays in 2025 relative to 2024. Moreover, selected specialty drugs nearly always have a prior authorization requirement. This provides both a baseline assessment and an indication of initial trends.
While roughly twenty percent of beneficiaries are expected to see savings from the out-of-pocket limit in the IRA, that leaves many who do not benefit from this cap and may experience more out-of-pocket costs and hurdles to access for their medications.[1] Policymakers may wish to consider the effect of the IRA on all beneficiaries’ access to treatment. This includes evaluating the current approach to Medicare Part D formulary oversight to determine if it is sufficient in the post-IRA environment to protect beneficiaries against formulary and cost-sharing practices that can result in prescription abandonment.
While there has been a high degree of focus on government savings in IRA evaluations, examination of the effects of the IRA on beneficiary costs and hurdles to care is a more complete assessment. If policymakers find, as we did, that beneficiary cost sharing is increasing or there are other hurdles to getting needed medications, they could explore modifications as the program is implemented. The IRA may save money for the federal government, but the value of the law is eroded if patients find that their costs increase or that they cannot access their medicines.
Formulary report
As directed by the IRA, the Centers for Medicare and Medicaid Services (CMS) will set Maximum Fair Prices (MFPs) for certain drugs in the Medicare Drug Price Negotiation Program (MDNP). MFPs are in effect for the 10 drugs selected for the MDNP in 2026 and the 15 drugs selected for the MDNP in 2027.[2]
In this alert, we evaluate the formulary position and cost sharing for 25 selected drugs. Specifically, we evaluated the Medicare Part D formularies in January 2024 compared to January 2025. Separately, we consider access in Medicare Advantage Prescription Drug Plans (MA-PD) and stand-alone Prescription Drug Plans (PDP) distinctly.[3]
There are many analyses of changes in formulary access for selected drugs; our report differs in that it evaluates changes in Part D plan types MA-PD and PDP separately, comparing them to each other and to changes over time. We have found this to be a key consideration as our earlier report showed that access to these two plan types is variable in the US, with less access to MA-PD particularly in lower-income and non-urban counties.
- We find that the 25 selected drugs are on formulary in 2025 to a large degree in both MA-PD and PDP, with a high degree of prior authorization for the specialty drugs. MA-PD have a higher rate of formulary coverage and a lower rate of prior authorization for the selected drugs on average.
- Considering patient out-of-pocket costs, we find co-pays in 2025 were higher in PDP for anti-diabetic and respiratory drugs in particular and higher on average across all 25 drugs relative to MA-PD. Coinsurance rates were somewhat higher in MA-PDs on average relative to PDPs.
- Co-pays increased more in PDPs (in 2025 relative to 2024) than in MA-PDs for anti-diabetic drugs in particular – the class most common among the 25 drugs – but for those same drugs co-pays decreased in MA-PDs. Coinsurance rates decreased in both plan types.
- Other differences are noted in the document that follows and detailed in Tables 1–4.
These findings are an early indication of how the IRA, specifically the out-of-pocket cap provision implemented in 2025 and the upcoming MFP implementation in 2026 and 2027, may be affecting formulary access and cost to beneficiaries already. Policymakers may wish to consider how the IRA is affecting beneficiaries and the government’s costs for drugs and premiums as formularies change in response to the changing financial incentives in the IRA for drug plans and biopharmaceutical manufacturers. This may present an uneven impact around the US, as our prior report showed that lower-income and non-urban areas of the US have less access to MA-PDs. We note the changes in access for different therapeutic classes among the selected drugs. Specifically:
We consider if the selected drugs are on or off the formulary: Drugs selected for the MDNP are required to be placed on the Part D plan formulary when the MFP is in effect, except when generics have entered the market. Therefore, if formulary inclusion rates are currently low, beneficiaries may experience higher formulary inclusion rates under the MDNP. If drugs selected for the MDNP are already on the formulary, beneficiaries may experience no change or could see increased utilization management.
We evaluate prior authorization and step edits: While drugs with an MFP must be on a plan's formulary, plans may use utilization management to control access. Both analysts and the plans themselves have suggested that the IRA will result in more utilization management.[4] We examine if there is prior authorization and step edits on the formularies for the selected drugs prior to the MFP.
We examine cost sharing for specialty drugs and non-specialty drugs distinctly: In Medicare, “specialty” drugs are allowed to be placed on a specialty tier, meaning patients are charged a coinsurance, or a percentage of the non-discounted price of the drug, typically 25–30 percent.[5] Other drugs that are lower cost, which are not considered “specialty,” are more typically placed on a co-pay tier, with a fixed cost of $45–$60. However, some plans may use coinsurance on tier three or lower rather than co-pay, which has been increasing in the last three years.[6], [7]
Patients taking specialty drugs with coinsurance will likely experience the effect of the $2,000 out-of-pocket cap in the IRA that went into effect in 2025.[8] Moreover, in 2025, the federal government reduced the subsidy provided to plans for beneficiaries who use enough medicines that their spending exceeds the out of pocket limit, or have “catastrophic costs,” which includes many who use specialty medicines.[9], [10] As of 2025, plans will be responsible for 60 percent of the beneficiaries' “catastrophic costs,” down from 15 percent previously with a government subsidy covering 80 percent.
Given these changes in benefit design and subsidies, plans also may have a stronger incentive to limit access to drugs likely to put patients above the out-of-pocket cap into catastrophic spending. After beneficiaries reach the cap, there are no financial means to manage utilization, such as co-pays or coinsurance, because cost sharing is eliminated. Limiting cost to the plan could be accomplished by a prior authorization, a step edit, or by excluding drugs from the formulary, with the exception of MFP drugs that are required to be covered once the MFP is implemented, unless a generic is available.[11] Because patients pay a coinsurance for specialty drugs, most people taking specialty drugs will reach their out-of-pocket cap more quickly. The MFP will decrease the price of the drug, so a beneficiary with coinsurance taking a specialty drug may take longer to reach the cap, but total outlays for the beneficiary would be the same as a drug without an MFP.[12] Additionally, it is projected that beneficiaries taking MFP drugs will have higher costs, particularly for drugs with a co-pay rather than insurance, due to plan supplemental coverage being applied differently in 2025 from the IRA; beneficiaries will have the same co-pay for drugs with a lower price, with the result that they will reach the out-of-pocket spending limit more slowly.[13]
We consider PDPs and MA-PDs separately: MA-PD plans tend to have more expansive medical coverage, including extra benefits such as dental care, compared to PDPs. MA-PD plans have been growing rapidly in enrollment compared to PDPs and are expected to continue increasing in enrollment. In 2024, nearly six in ten enrollees were in a MA-PD plan, compared to less than three in ten when Medicare Part D was enacted in 2006. MA-PDs have greater ability to manage the cost of the IRA as they cover and get paid a premium for both medical benefits and drug benefits and can shift costs around over a larger base. As such, the IRA may accelerate this trend of PDP exits, likely increasing enrollment in MA-PDs.[14] In 2024 a premium stabilization demonstration allowed PDPs to receive an enhanced subsidy from the federal government to reduce premiums, but even with this demonstration there was still a sizeable exodus of PDPs and their premiums grew.[15]
Findings: Formulary management in 2025 for drugs selected for the 2026 and 2027 MDNP
Are the selected drugs on formulary?[16] (Table 1)
- Considering the enrollment weighted average across MA-PD and PDP, of the 25 selected drugs for the MDNP, 21 are on 95 percent or more January 2025 formularies, evaluating across all plan types, MA-PDs, and PDPs.
- Two specialty medicines saw lower placement on formulary (14 and 36 percent) in 2025 relative to 2024, others either increased by 5 percent or less, or stayed the same.
What is the cost sharing for the selected drugs? (Table 1)
- All 12 specialty drugs had coinsurance between 29–32 percent, and declined by 1 percent on average in 2025 relative to 2024.
- For the 13 non-specialty drugs, 12 were on tier three or lower in 95 percent or more plans.[17] Average co-pays across all plan types declined or remained the same for 12, one grew by $1.[18]
- There were differences between MA-PD and PDP, which will be described later.
Do the selected drugs have prior authorization or step edits? (Table 1)
- All but one of the specialty drugs require prior authorization in 90 percent or more of plan formularies.
- The non-specialty drugs include one GLP-1 drug, which is always subject to prior authorization, and for that drug, prior authorization increased 16 percent relative to 2024.
- Step edits are rarely used (less than two percent) for any of these selected drugs (not shown in our evaluation since there was so little variation).
How do the selected drugs differ on formulary for MA-PDs v. PDPs? (Table 2)
- Five of the selected drugs appear on formulary more in MA-PD plans relative to PDPs ranging from being on 4–12 percent more on formulary.
- Eight selected specialty drugs are available without prior authorization 2–7 percent more often in MA-PD, one drug is available one percent more often in PDP formularies without prior authorization.
- Coinsurance rates were 3–5 percent higher in MA-PD relative to PDP for nine selected specialty drugs and 3–7 percent lower for two.
- Co-pays were lower for 12 of the 13 non-specialty drugs in MA-PD relative to PDP. They were $22 lower for the two respiratory drugs and $8 lower for antidiabetic agents in MA-PD relative to PDP.
How are formularies different in 2025 relative to 2024 for MA-PDs v. PDPs? (Table 3 and Table 4)
- PDPs increased co-pays for 6 of the 13 non-specialty antidiabetic agents by $10–$14.
- PDPs increased placement on tier three or lower for these same six antidiabetic drugs by 14–16 percent.
- Co-pays decreased in MA-PD by $4–$6 for those same metabolic drugs.
- In MA-PD those same anti-diabetic drugs had increases of tier three or lower placement of two percent or less, relative to 2024, they were already at a higher rate of tier three relative to PDPs in 2024.
Key findings
As reflected in Tables 1–4, we found high rates of formulary coverage. Moreover, our report would indicate that the MFP is unlikely to meaningfully reduce beneficiary out-of-pocket costs. The selected specialty and non-specialty drugs are largely on a formulary tier with a fixed co-pay, which would not be required to change as a result of the MFP and appear to be increasing already in PDPs. Specialty drugs are nearly always on a coinsurance tier with prior authorization, which will be allowed with an MFP in place as well. Due to the new out-of-pocket cap, beneficiary outlays may be the same with and without the MFP as the person taking a specialty drug will nearly always spend to the limit with or without an MFP. Moreover, beneficiary outlays may increase due to the changes in how supplemental coverage is applied to reaching the limit as described by another analyst.[9] There may be other changes to formularies, such as increasing cost sharing (which may deter beneficiaries from initiating treatment) and use of prior authorization or step edits to manage utilization in the presence of the out-of-pocket cap, which remains to be seen and should be followed.[19]
Key takeaways
Our report indicates that formulary access is high for the selected drugs, and therefore is unlikely to meaningfully increase with the MDNP.[20] The findings related to changes in averages obscure the sizeable differences between MA-PDs and PDPs, particularly in cost sharing and cost sharing increases. It is important to consider formulary access in the different plan types as there is uneven access to MA-PD and PDP around the US.
As the IRA is implemented, policymakers may consider greater scrutiny of formulary access and changes to patient out-of-pocket costs, utilization management tools, and access to an array of plans for formulary coverage that meets the beneficiary’s health needs. Incentives in the IRA may increase beneficiary outlays. We will continue to monitor formulary access for these selected drugs and a broader set of medicines for comparison.
Methodology
These findings reflect a population weighted average. We remove Special Needs Plans (SNPs) and plans with suppressed data and we consider 30-day supplies for co-pays and coinsurance drawing the data from the CMS January monthly formulary files. We evaluated 299 formularies from 4,594 Medicare Part D Plans (MA-PD and PDP) in January 2024, and 260 formularies from 4,164 Medicare Part D Plans (MA-PD and PDP) in January 2025. All National Drug Codes for the 25 drugs were selected. The distribution of each type of access was based on the number of unique plans with that type of formulary (eg, third-tier co-pay). A unique plan had a distinct contract type, brand, cost type, and tier level.
[1] ASPE, “Inflation Reduction Act Research Series: Projecting the Impact of the $2,000 Part D Out-Of-Pocket Cap for Medicare Part D Enrollees with High Prescription Drug Spending,” 2025.
[2] While semaglutide was selected, we only consider formulary placement for Ozempic (not Wegovy), since obesity coverage is excluded from Medicare.
[3] This evaluation is t weighted by plan enrollment, meaning a plan with 100,000 enrollees will count more than a plan with 10,000 enrollees in our assessment.
[4] Magnolia Market Access Survey of Payors and KFF.
[5] Costing $950 or more per month, defined by CMS.
[6] Avalere, “Medicare Prescription Payment Plan May Help Enrollees Facing More Coinsurance in 2025."
[7] We determine that a drug is a “specialty” drug if the cost per claim was over $1,000 in 2022 and if it is on a formulary tier higher than tier three more than 90 percent of the time. Using Medicare Part D Dashboard, 2022 is the most recent data available.
[8] The cap will be adjusted annually after 2025 at the projected rate of growth in Part D costs per enrollee.
[9] Explanation of Part D redesign.
[10] The MA-PD will be better able to manage the additional risk across their medical and prescription drug spending as a result of other changes in the IRA, whereas the PDP drug plan has only the drug benefit to manage.
[11] Milliman, “Medicare Part D Risk and Claim Cost Changes with the Inflation Reduction Act,” 2023.
[12] "The Inflation Reduction Act Coinsurance Glitch," Health Affairs Forefront, January 17, 2024 .
[13] Milliman, “Expected Impact of the Inflation Reduction Act on Medicare Drug Price Negotiation Program on Medicare Part d Beneficiary Out of Pocket Costs,” 2024.
[14] CMS Formulary Files.
[15] Avalere.
[16] All formulary analysis is weighted by enrollee enrollment, so larger plans with more beneficiaries and formularies have more of an effect on the average compared to plans with less enrollment.
[17] In tier three or lower on the drug formulary typically means the patient pays a fixed co-pay between $45–$60. When a drug is on a higher tier then the patient typically pays a coinsurance.
[18] As some plans shift to coinsurance in tier three and lower, co-pay may not reflect the cost sharing for an increasing number of beneficiaries.
[19] Doshi JA, Li P, Huo H, Pettit AR, Kumar R, Weiss BM, Huntington SF. High cost sharing and specialty drug initiation under Medicare Part D: a case study in patients with newly diagnosed chronic myeloid leukemia.
[20] Unless the selected drug has a generic when the MFP is set to go in effect. If so, it may not be placed on formulary.
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